LIRA UNIVERSITY

FACULTY OF MANAGEMENT SCIENCES

DEPARTMENT OF PUBLIC ADMINISTRATION AND MANAGEMENT

ACADEMIC YEAR - 2024/2025

YEAR THREE, SEMESTER ONE

HUMAN RESOURCE MANAGEMENT - PAM 3101

NAME OF COURSE FACILITATOR: MR. OBICI GILBERT

GROUP EIGHT

NAME REGISTRATION No. SIGNATURE

WERE ANDREW 22/U/0398/LPW/PS

ABONYO MONICA 22/U/0407/LPW/PS

EJANG JULIET 22/U/0141/LPW/PS

TOPIC EIGHT: PERFORMANCE APPRAISAL.

a ) Definition

b ) Objectives of performance appraisal

c ) Benefits of performance appraisal

d ) The appraisal processes

e ) Methods of performance appraisal.

f ) Challenges affecting performance appraisal

g ) Suggestions for the improvement of performance appraisal

h ) Factors contributing to performance deficit.

i ) Any other relevant issues.

Introduction:

Performance appraisal refers to the systematic evaluation of employees' job performance and
productivity against pre-established criteria and objectives (Dessler, 2017). It involves
assessing both the accomplishments and shortcomings of employees, with the ultimate goal
of enhancing their contributions to the organization. It is also used to provide feedback,
identify training needs, and foster communication between managers and employees
(Armstrong, 2012). In essence Performance appraisal refers to a systematic process of
evaluating an employee's job performance and contribution to a company. A formal program
in an organisation which is concerned with not only the contributions of the members who
form part of the organisation but also spotting the potential of the employees. Performance
appraisal involves documenting and assessing an employee's skills, achievements, and areas
for improvement. Performance appraisals can be conducted annually, semi-annually, or
quarterly, depending on the company's policies.

Objectives of performance appraisal

Feedback and Development: Provides employees with insights into their strengths and areas
for improvement. This helps employees set clear and achievable goals for their work and
helps employers to identify training and development areas to enhance employee skills and
knowledge. Offering constructive feedback to employees to highlight strengths and areas for
improvement (Aguinis, 2013).

Compensation and Rewards: Performance appraisal Justifies salary increments,

promotions, or bonuses based on performance. Performance appraisals determine eligibility
for performance-based incentives or rewards and ensures fair and equitable compensation
practices. Identifying high-performing employees for promotions, salary increments, and
other rewards (Mondy & Martocchio, 2016).

Human Resources Planning: Performance appraisals help identify potential successors for
key positions. Performance appraisal helps organizations retain and develop top talent and
also provides information for hiring, promotions, transfers, and terminations.

Organizational Performance: Performance appraisal holds employees accountable for their

performance and contributions. Performance appraisal helps identify areas where processes,
systems, or policies can be improved.

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Employee Motivation: Performance appraisal facilitates the acknowledgement and
rewarding of employees for their achievements and enhances employee engagement and job
satisfaction.

Benefits of Performance Appraisal

Performance appraisals offer numerous benefits for both employees and organizations:

Benefits for Employees

Career Development: Performance appraisal Provides insights into strengths and

weaknesses, identifies areas for improvement and development and helps set clear career
goals. Identifying weaknesses through appraisal helps management develop targeted training
programs (Mondy & Martocchio, 2016).

Recognition and Rewards: Performance appraisal facilitates acknowledgement of

achievements and contributions. It Increases motivation and job satisfaction. Performance
appraisal may also lead to promotions, raises, or bonuses.

Feedback and Coaching: Performance appraisal Offers constructive feedback for growth
and provides opportunities for coaching and mentoring. It also enhances self-awareness and
performance.

Improved Communication: Performance appraisal opens lines of communication between

employees and managers and fosters a more collaborative and supportive work environment.

Benefits for Organizations

Improved Performance: Performance appraisal helps aligns individual goals with

organizational objectives, identifies areas for process improvement and enhances overall
productivity and efficiency. Providing feedback helps employees improve their performance
and work towards achieving organizational goals (Dessler, 2017).

Better Decision-Making: Performance appraisal provides data-driven insights for staffing

decisions, supports succession planning and talent management and helps allocate resources
effectively.

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Enhanced Employee Satisfaction: Performance appraisal demonstrates commitment to
employee development and well-being, boosts employee morale and engagement and reduces
turnover and absenteeism.

Legal Compliance: Performance appraisal helps organizations comply with employment

laws and regulations through documentation for performance-related issues.

The appraisal processes

The appraisal process is a systematic evaluation of an employee's performance and

productivity in relation to pre-established goals, competencies, and behaviors. The primary
goal is to assess strengths, identify areas for improvement, and provide feedback for
development. Below are the steps involved in the appraisal process:

Establishing performance standards:

The first step in the process of performance appraisal is the setting up of the standards which
will be used to as the base to compare the actual performance of the employees. This step
requires setting the criteria to judge the performance of the employees as successful or
unsuccessful and the degrees of their contribution to the organizational goals and objectives.
The standards set should be clear, easily understandable and in measurable terms (Dessler,
2017).

Communicating the standards:

Once set, it is the responsibility of the management to communicate the standards to all the
employees of the organization. The employees should be informed and the standards should
be clearly explained to the employees. This will help them to understand their roles and to
know what exactly is expected from them. The standards should also be communicated to the
appraisers or the evaluators and if required, the standards can also be modified at this stage
itself according to the relevant feedback from the employees or the evaluators (Aguinis,
2013).

Measuring the actual performance:

The most difficult part of the Performance appraisal process is measuring the actual
performance of the employees that is the work done by the employees during the specified
period of time. It is a continuous process which involves monitoring the performance
throughout the year. This stage requires the careful selection of the appropriate techniques of

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measurement, taking care that personal bias does not affect the outcome of the process and
providing assistance rather than interfering in an employees work (Mondy & Martocchio,
2016).

Comparing actual performance with desired performance:

The actual performance is compared with the desired or the standard performance. The
comparison tells the deviations in the performance of the employees from the standards set.
The result can show the actual performance being more than the desired performance or, the
actual performance being less than the desired performance depicting a negative deviation in
the organizational performance. It includes recalling, evaluating and analysis of data related
to the employees’ performance.

Discussing results [Feedback]:

The result of the appraisal is communicated and discussed with the employees on one-to-one
basis. The focus of this discussion is on communication and listening. The results, the
problems and the possible solutions are discussed with the aim of problem solving and
reaching consensus. The feedback should be given with a positive attitude as this can have an
effect on the employees’ future performance. Performance appraisal feedback by managers
should be in such way helpful to correct mistakes done by the employees and help them to
motivate for better performance but not to demotivate. Performance feedback task should be
handled very carefully as it may leads to emotional outburst if it is not handing properly.
Sometimes employees should be prepared before giving them feedback as it may be received
positively or negatively depending upon the nature and attitude of employees.

Methods of performance appraisal

Graphic Rating Scale: A simple method where raters assess employees on various
performance dimensions using a numerical scale for example 1-5. It is easy to use and
understand, provides a quantitative measure but can be subjective and prone to halo or horns
effects (Armstrong, 2012).

Forced Choice: Raters choose from a set of predetermined statements that describe different
levels of performance. This method reduces subjectivity and ensures consistency. It can be
time-consuming and may not capture the nuances of performance.

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Critical Incident Method: Raters record specific examples of an employee's behavior that
demonstrate their performance, both positive and negative. This method provides concrete
evidence and can be used for coaching and development.

Essay Evaluation: Raters write a narrative description of an employee's performance. This

provides detailed feedback and can be tailored to individual employees. Though it can be
subjective and difficult to compare across employees.

Behaviorally Anchored Rating Scale (BARS): Combines the advantages of graphic rating
scales and critical incident methods. Raters evaluate employees against specific behavioral
examples that anchor each rating point. This method provides clear and objective criteria,
reduces subjectivity.

360-Degree Feedback: Feedback is collected from multiple sources, including peers,

subordinates, supervisors, and sometimes customers. This method provides a well-rounded
view of performance, can improve employee development. It can also be time-consuming and
may lead to conflicts if feedback is negative (Aguinis, 2013).

Management by Objectives (MBO): Employees and managers set specific, measurable,

achievable, relevant, and time-bound (SMART) objectives. Performance is evaluated based
on achievement of these objectives. This method helps align individual goals with
organizational goals, promotes employee involvement (Mondy & Martocchio, 2016).

The best method for a particular organization depends on its culture, size, and specific needs.
It's often beneficial to use a combination of methods to get a comprehensive picture of
employee performance.

Challenges affecting performance appraisal

Performance appraisal is a crucial tool for organizations, but it can also be fraught with
challenges. Here are some common issues that can affect the accuracy and effectiveness of
performance appraisals:

Subjectivity and Bias: Rating an employee highly in one area leads to an inflated overall
rating. A negative perception in one area leads to a low overall rating. Raters tend to avoid
extreme ratings and rate most employees in the middle.

Lack of Clarity and Consistency: Some performance standards maybe ambiguous and
employees may not understand the expectations clearly.

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Inadequate Training: Raters may not be equipped with the skills to conduct accurate
appraisals.

Resistance to Feedback: Employees may resist feedback, especially if it's critical.

Time Constraints: Raters may not have enough time to conduct thorough appraisals.

Political Influences: Personal relationships or biases may influence ratings.

Technological Limitations: Outdated appraisal systems may not be efficient or user-

friendly.

Suggestions for the improvement of performance appraisal

To enhance the effectiveness and fairness of performance appraisals, consider implementing

the following strategies:

Clear Expectations and Goals: Ensure that performance objectives are Specific,
Measurable, Achievable, Relevant, and Time-bound (SMART). Maintain open
communication throughout the year to clarify expectations and provide feedback.

Rater Training: Train raters to recognize and mitigate biases in their evaluations. Provide
training on effective feedback delivery and active listening.

Multiple Raters: Gather feedback from peers, subordinates, supervisors, and customers to
get a comprehensive view of performance.

Continuous Feedback: Conduct regular check-ins throughout the year to provide ongoing
feedback and address any concerns.

Performance Management Systems: Utilize performance management software to

streamline the process and provide data-driven insights.

Feedback Opportunities: Provide employees with opportunities to provide feedback on the

appraisal process.

Factors contributing to performance deficit

Performance deficit, or the failure to meet expected standards, can be attributed to a variety
of factors. Here are some common contributors:

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Individual Factors:

Lack of Skills or Knowledge: Employees may not possess the necessary skills or knowledge
to perform their jobs effectively.

Lack of Motivation: Low motivation can lead to decreased effort and performance.

Personal Issues: Personal problems, such as stress, health issues, or family problems, can
negatively impact performance.

Negative Attitudes: Negative attitudes, such as cynicism or pessimism, can hinder

performance.

Organizational Factors:

Poor Leadership: Ineffective leadership can create a negative work environment and
demotivate employees.

Inadequate Resources: Insufficient resources, such as tools, equipment, or information, can

impede performance.

Unclear Expectations: Ambiguous or conflicting expectations can lead to confusion and

reduced performance.

Poor Communication: Ineffective communication can result in misunderstandings and

decreased productivity.

Organizational Culture: A negative or toxic organizational culture can create a hostile work
environment and lower morale.

Job-Related Factors:

Job Mismatch: Employees may be assigned to jobs that do not align with their skills or
interests.

Work Overload: Excessive workload can lead to stress, burnout, and decreased
performance.

Job Underutilization: Employees may not be fully engaged in their work or feel challenged.

Poor Work Environment: A physically uncomfortable or unsafe work environment can

negatively impact performance.

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External Factors:

Economic Conditions: Economic downturns or industry-specific challenges can affect

performance.

Technological Changes: Rapid technological advancements may require employees to adapt

quickly, which can be challenging.

Global Factors: Global events, such as political instability or natural disasters, can impact
businesses and employee performance.

Any other relevant issues

Key Elements of a Good Performance Appraisal

Objective Criteria: Use clear, objective, and measurable criteria to assess performance.

Fairness: The appraisal should be unbiased, transparent, and free from favoritism or
discrimination.

Constructive Feedback: Focus on providing constructive criticism that helps employees

understand where they can improve.

Two-Way Communication: Encourage employees to voice their thoughts, concerns, and

suggestions during the appraisal discussion.

Regularity: Performance appraisals should be conducted regularly that is to say annually or

biannually with continuous feedback between formal reviews.

Conclusion:

Performance appraisal is a vital tool for organizations aiming to assess and improve
employee performance. With clear objectives, benefits, and a structured process, appraisals
help inform critical HR decisions and foster employee development. However, challenges
like bias and inconsistent standards must be addressed to enhance the effectiveness of
appraisals. Improvements such as training, using diverse methods, and increasing employee
involvement can contribute to a more accurate and fair appraisal system. Addressing factors
contributing to performance deficits, such as unclear expectations or inadequate training, is
essential for improving overall productivity.

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REFERENCES

Aguinis, H. (2013). Performance management (3rd ed.). Pearson.

Armstrong, M. (2012). Armstrong's handbook of human resource management practice (12th

ed.). Kogan Page.

Dessler, G. (2017). Human resource management (15th ed.). Pearson.

Mondy, R. W., & Martocchio, J. J. (2016). Human resource management (14th ed.). Pearson.